People and police watch as demonstrators rally on the sidewalk outside the Supreme Court during the third and final day of legal arguments.

The Supreme Court on Wednesday had the last of its three days of arguments over the Obama health-care law, with justices set to weigh what happens to the rest of the overhaul if the court strikes down the requirement that individuals carry health insurance.

We have reporters at the court, who are sending in updates on the action. The morning session started at 10 a.m. ET, and the afternoon session started at 1 p.m.

Wednesday morning the court is hearing 90 minutes of argument on what should happen if the insurance mandate–the requirement that individuals carry health insurance–is nullified. The law’s challengers say the entire law should then be declared void.

It’s a key question, particularly considering what happened a day earlier. At Tuesday’s arguments, the court’s conservative justices sharply challenged the insurance mandate, raising the prospect of a 5-4 decision finding it unconstitutional. If you haven’t already, read our day 2 live blog and article.

There’s a smaller crowd outside the court Wednesday morning than there has been on previous days for the health overhaul case, even though the morning’s arguments will be devoted to whether to keep most of President Barack Obama‘s signature law in place if parts of it are struck down. Supporters of the law who are here are reflecting that in their chant of the day: “Ho ho, hey hey, ObamaCare is here to stay.” (Photo: Getty Images)

The Obama administration argues that most of the law’s provisions aren’t connected to the mandate and should remain in place regardless. But it says that if the mandate goes, certain provisions intertwined with it must be struck down as well. Those provisions require health insurers to accept all prospective customers, even those who are already ill.

The reason? The administration and health insurers say it would be impossible for insurers to accept all comers unless they are assured of gaining millions of new customers through the mandate to carry coverage.

An Atlanta-based federal appeals court took a different position last year — different from the Obama administration and its opponents — when it ruled the insurance mandate unconstitutional. That court, the 11th U.S. Circuit Court of Appeals, said all other provisions of the law should remain in force.

In addition to hearing the health-care arguments, the Supreme Court is set to release at least one opinion this morning. Those opinions come right at the top of the hour at 10:00, meaning the arguments probably wonâ€™t start until around 10:15 or so.

Among the audience for this morning’s arguments: Sen. Kelly Ayotte (R., N.H.) Plenty of senators from both parties have snagged tickets for the health law arguments. But we think Ms. Ayotte may be the only one who’s also a named party in one of the key cases that the justices will be basing their decision on: Ayotte v Planned Parenthood of 2006, which established new tests for judges trying to work out how much of a law to strike down if part of it is invalidated. Photo: AFP/Getty Images

Did we mention that Justice Anthony Kennedy is a frequent swing vote on the court? It happened again Wednesday morning, as he sided with conservatives in a 5-3 ruling in a case about damage rules in certain privacy-violation cases. (Justice Elena Kagan was recused in the case.) In a ruling by Justice Samuel Alito, the court adopted a more limited definition of damages, siding with the Federal Aviation Administration against a former pilot who thought the government had violated his privacy.

It’s a typical case where Justice Kennedy’s vote with the conservatives was decisive. Had he gone the other way, it would have been a 4-4 tie and an appellate courtâ€™s ruling in favor of the pilot would have been upheld.

Rep. Michele Bachmann plans to make another appearance outside the Supreme Court after the morning session on Wednesday, accompanied by Reps. Louie Gohmert and Steve King, urging the court to strike down the Obama health law.

As in prior days, the Supreme Court will be releasing audio and transcripts of the arguments very quickly, likely about an hour after they wrap up. If you haven’t already, check out WSJ.com’s annotated transcript of Tuesday arguments, with highlights and audio.

Paul Clement is back for an encore this morning after his widely praised performance attacking the Obama health law in Tuesday’s arguments. Mr. Clement stayed on message Tuesday, hammering home his contention that Congress has never required people to purchase a product as it did when it established the health insurance mandate. Photo: Bloomberg

Wednesday, Mr. Clement is arguing that if the mandate is unconstitutional, the entire law must be nullified. U.S. District Judge Roger Vinson in Pensacola, Fla., took that position last year, writing that the law’s parts were too intricately entangled to keep some and not others. However, the appellate court in Atlanta reversed Judge Vinson on that point.

The Supreme Court’s liberal justices went head to head with conservative judges on the bench Wednesday morning in an effort to protect the health law, arguing strongly in favor of keeping most of the overhaul legislation even if the individual requirement to purchase insurance or pay a fee is ruled unconstitutional.

Justice Sonia Sotomayor was first to interrupt the challengers’ lawyer Paul Clement, who is arguing that the whole law should be invalidated, shortly after he began making his remarks. “Why shouldn’t we let Congress” decide what to do, she asked him. “What’s wrong with leaving it in the hands of people” who should be taking this decision, “not us?” she continued.

Conservative justices Antonin Scalia and Samuel Alito have seemed to endorse Mr. Clement‘s case. Justice Scalia has been responding frequently to Justice Sotomayor‘s remarks, pointing to what he calls “legislative inertia” as a reason not to leave the decision of how much of the law to keep to Congress.Â Justice Scalia has also questioned whether it is proper for the justices to consider what Congress intended when it passed the legislation.

Correction: This item’s second sentence was corrected to reflect that the comment on congressional intent came from Justice Scalia, not Justice Alito.

Justice Ruth Bader Ginsburg has sought to argue that the most legally conservative position is to uphold the law. If the justices have to choose between “a wrecking operation and a salvage job, a more conservative approach would be a salvage job,” she said.

Chief Justice John Roberts has asked several questions of Mr. Clement that further the case for striking down the whole law, and echo other remarks from Justices Alito and Scalia.

He has suggested that the whole of the health-law should be considered to be linked to the individual mandate because its myriad of other provisions, such as black-lung payments, were actually included as sweeteners to pass the main bill. Without them, Congress “would not have been able to cobble together the votes to get it approved,” he said. Photo: Getty Images

Justice Kennedy has asked broader questions about the precise test that he thinks should be applied in this case to determine what Congress intended. He’s been met with a flurry of responses from Justice Sotomayor, Justice Elena Kagan, and Justice Stephen Breyer. Photo: Getty Images

Justice Kagan has indicated that she believes the case law to date supports the idea that the court should apply a light-touch to what it does, and that if the choice is between leaving half-a-loaf and no loaf, half-a-loaf wins.

Justice Breyer has been especially aggressive in challenging Mr. Clement to say what he proposes the justices actually do to resolve the fate of the law, suggesting that his options include appointing a special master or going back to the district courts. He’s also listed several of the provisions of the law, prompting laughter when he referred to expanded health services for Native Americans as “the Indian thing.”

“Those [other provisions] have nothing to do with the [mandate] stuff… OK?” he said. “They can stand on their own.” Photo: Getty Images

Mr. Kneedler is arguing the governmentâ€™s position. The bearded lawyer is a lifer in the solicitor generalâ€™s office, having served since 1979. He has argued more than 100 cases before the high court and was by the side of Solicitor General Donald Verrilli Tuesday morning as Mr. Verrilli struggled his way through an hour of harsh questioning. Mr. Kneedler has another tough job Wednesday morning because heâ€™s arguing about a scenario the government is trying to avoid, in which the Supreme Court strikes down the insurance mandate. Photo: Associated Press

Mr. Kneedler, opening his 30-minute presentation to the court, said the justices should reject the challengers’ “sweeping” proposition that the whole law must be invalidated.Â He said most of the lawâ€™s provisions donâ€™t even apply to the parties who challenged the insurance mandate.

Chief Justice Roberts questions whether there will be whole new lines of litigation on the remaining provisions of the health-care law if the court leaves the rest of the law in place without the insurance mandate.

Justice Antonin Scalia has shown he sympathizes with the idea that the case law on severability is complicated–that is, how much of a law to uphold if part is struck dowÂ . When Mr. Clement observed that courts’ decisions on the issue over the years span a variety of interpretations, the judge replied, “they sure do.” Photo: Getty Images

Several justices express concern about doing harm to insurance companies if the mandate falls but the rest of the law is left in place.Â Justice Kennedy worries about imposing a “risk” on insurance companies “that Congress never intended.”

Justice Scalia says it’s “totally unrealistic” to expect the Supreme Court to go through 2,700 pages of the health-care law and figure out which provisions should remain in place and which must be thrown out because they’re interconnected with the insurance mandate.

Justice Kagan suggests the court has no business trying to guess whether Congress would or wouldnâ€™t have voted for other provisions in the law, absent the insurance mandate.Â To engage in that exercise would be a “revolution” in the court’s jurisprudence, she says. Photo: Elena Kagan

Chief Justice Roberts suggests that Mr. Kneedler, the government lawyer, has made effectively made the case that if the insurance mandate falls, the guarantee that insurers accept all customers must go, too.Â But, the chief says, that doesnâ€™t tell the court what to do with all the many other provisions of the law.

Chief Justice Roberts, shifting gears, asks what should happen to the rest of the health-care law if the court strikes down the law’s expansion of Medicaid.Â The Medicaid issue will be considered by the court this afternoon.Â Mr. Kneedler says that if the court strikes down the Medicaid expansion, other provisions should remain in place.

Justice Kennedy, again exploring the competency theme, says Mr. Kneedler suggests the court has the expertise to invalidate some parts of the law, but not the expertise to judge whether other parts should remain in place.Â The justice says he finds that “odd.”

Earlier, the 11th U.S. Circuit Court of Appeals struck down the Obama health plan’s individual mandate, but ruled the rest of the Affordable Care Act could stand. Since neither the government nor the challengers agreed, the Supreme Court appointed Mr. Farr to argue that position.

Mr. Farr began his 30-minute argument saying that while it would be best to leave the entire law intact, if the court found the individual mandate unconstitutional, it would be a mistake to also kill community rating and guaranteed issue, as the government urges. That, he said, would exemplify â€œthe best driving out the good.â€

Justices Ginsburg and Kagan replied that Congress itself had said the three provisions– the individual mandate, community rating and guaranteed issue –Â were linked. And without the individual mandate, rates would skyrocket as unhealthy people acquired coverage at the same price as the healthy, who would then drop coverage until they became sick.

Mr. Farr said that beyond the individual mandate, the health law included at least half a dozen other provisions intended to keep insurance affordable, such as authorizing annual enrollment periods (so people couldnâ€™t wait until they were ill to get insurance) and large subsidies for those being priced out.

Chief Justice Roberts asked what would happen next if only the mandate fell. Would insurance companies, for example, be expected to litigate over remaining provisions they found onerous? No, said Mr. Farr. Insurance companies or others who found the remaining provisions unpalatable could go to Congress to seek new legislation that would alter the system. States that have adopted guaranteed issue or community rating laws have modified those policies in light of experience, he said, adding that one, Massachusetts, responded by adopting a minimum coverage requirement.

Justice Scalia would have none of that. He said that there wouldnâ€™t be 60 Senate votes, presumably Republicans, to break a filibuster and repeal the entire act, so the other provisions would remain on the books. Mr. Farr replied that it was not appropriate for the court to make legislative choices reserved to Congress.

Meanwhile, in the markets, a muted reaction among insurance stocks. UnitedHealth Group is off 0.2% at last glance and Aetna is down 0.5%. To be sure, these declines are actually less than that of the broader market. Pfizer is down 0.7% and Merck is off 0.3%. Expect more turbulence ahead. More analysis in MarketBeat.

The after lunch session will complete the court’s six hours of argument with anÂ hour-long session examining the health-care law’s expansion of Medicaid, a jointÂ federal-state insurance program for the poor.

A group of 26 states challengingÂ the law has said it unconstitutionally coerces them to spend more on theÂ program. Lower courts have ruled for the Obama administration on that issue,Â saying the states could leave Medicaid if they wished.

The court has posted the audio and transcript for the Wednesday morning session. The Wednesday WSJ annotated transcript is here, and will be updated. The afternoon session is starting now, and we’ll have updates shortly.

Meanwhile, two small rallies competed outside the court. A Tea Party Patriots event just in front of the marble steps featured Republican Reps. Michele Bachmann of Minnesota and Tim Scott of South Carolina, who told their crowd of activists that the morning’s arguments had shown that the whole health law would have to go.

Immediately adjacent were the supporters of the health law, organized by advocacy group Families USA, who had a new chant today that cuts right to the heart of the main issue in the case: “Hey hey Justice Kennedy, health care helps my family!” Photo: Getty Images

Health law challenger Randy Barnett, the Georgetown Law professor, continued to sound confident as he spoke to reporters outside the court. After arguments Tuesday and Wednesday, “no one would be surprised” if the court invalidates the law, he said.

In the afternoon session, the Supreme Court’s liberal justices have been peppering Paul Clement with a host of skeptical questions about his argument that the health law unfairly coerces the states into growing their Medicaid program Wednesday afternoon.

Mr. Clement made it about ten seconds into his argument before being cut off by Justice Elena Kagan. “Why is a big gift from the federal government a matter of coercion?” she asked. “It’s just a boatload of federal money. It doesn’t sound coercive to me, let me tell you.”

States have to enroll poor, childless adults in the joint federal-state government health insurance program after 2014. The federal government will pick up 100% of the costs of the expansion for the first few years, and then 90%.

Justice Kagan challenged Mr. Clement to explain whether he would still be saying that the provision was coercive if the federal government agreed to pick up 100% of the tab permanently. He’s arguing that it is, because the government is insisting that the states comply with the expansion as a condition of remaining in the 45-year-old Medicaid program at all.

Justice Kagan, by the way, isn’t having any of that. She compared Mr. Clement’s argument to her offering him $10 million to come work for her. Would he refuse that, she wanted to know. He said he would want to know where the money came from, prompting Justice Kagan to reply, “Wow. Wow!”

This aspect of the case has long been seen as an uphill battle for the states, even by some conservative legal experts. Mr. Clement has fashioned his appeal to the justices around the idea that they should try to set some sort of limiting principle for how much Congress can use its spending power to compel the states to do things they otherwise wouldn’t want to do. The court has never actually struck down a federal law based on the “coercion” argument.

“Establish a beachhead, say that coercion matters,” Mr. Clement said as he tried to wrap up his argument. The justices seemed unwilling to let him off the hook, and were still probing him forty minutes after he started.

Justice Stephen Breyer, meanwhile, has been hitting Mr. Clement hard on his most central claim: that the federal government will force states to leave the Medicaid program entirely if they don’t go along with the expansion under the health law. States say that they are afraid that this will destroy their budgets, which rely heavily on Medicaid funds.

Justice Breyer says that that isn’t the case — it’s up to the Health and Human Services Secretary to decide whether to kick them out altogether, and administrative law requires the secretary and other federal government officials to act reasonably, he argues. “Now, does that relieve you of your fear?” he asked. Photo: Getty Images

Mr. Clement responded that it doesn’t, since the health law appears to suggest that the secretary could have that power, and that HHS officials have previously indicated to states that they might have to drop out of the program entirely if they wouldn’t accept certain particular new provisions of Medicaid law.

The conservative justices were relatively quiet during the first part of Mr. Clement’s argument, although Antonin Scalia invited him to offer the remainder of his argument near the end of his allotted time, saying the court was “on pins and needles here.”

Chief Justice John Roberts suggested to Mr. Clement soon after that that the growth of the Medicaid program over time was a consequence of states’ willingness to participate in it, complete with federal strings attached. The states shouldn’t be surprised when those strings get pulled, he said.

Justice Ruth Bader Ginsburg said that while 26 states are claiming the Medicaid provision should be overturned because it’s coercive to them, the other states seem to want to participate in it and it would be unfair to them to strike it. Photo: Getty Images

Justice Scalia weighed in to point out one of the more political aspects of the case. Had it occurred to Mr. Clement, he asked, that the 26 states challenging the law all had Republican governors and the others were led by Democrats? (Note: New Mexico is one Republican-controlled state not signed onto the constitutional challenge.)

During this pause, if you haven’t already, you can update your Twitter list with Supreme Court reporterÂ @jessbravin and health reporterÂ @louiseradnofsky, who have been covering the arguments. And if you are so inclined, for more WSJ tweets, you can also add health news editorÂ @janetadamy, legal editor @PLandersDC and online editorÂ @timjhanrahan

The overrun appears to have happened because justices had grilled Mr. Clement for more than the 30 minutes initially expected to allotted to him. We’ll have more details shortly from reporter Brent Kendall.

The session ran 30 minutes longer than expected, as the justices continued to have questions for both sides.Â Solicitor General Verrilli faced a barrage of tough questions from the courtâ€™s conservative wing, meaning the legality of the Medicaid expansion may be a much closer call than many court watchers expected going in.

Chief Justice Roberts jumps in with an early hypothetical: Would it be ok for the federal government to say to the states, if you donâ€™t participate in this expansion, weâ€™ll cut off every federal dollar you get for every program you participate in?Â The chief is attempting to get Mr. Verrilli to concede that, at some point, the federal government could place such onerous conditions on the states that it would in effect be coercing the states to participate in the program.

Meanwhile, outside the court, Paul Clement tells reporters it has been “a great privilege” to argue the case, that Solicitor General Donald Verrilli did a “terrific job,” that he’s not in the business of being a “prognosticator” and that justices’ questions mainly show how seriously they’re taking the case. Photo: Reuters

Earlier, back inside the courtroom, the government’sÂ Mr. Verrilli resisted engaging in this discussion started by Chief Justice Roberts, saying repeatedly that the chief’s hypothetical is nowhere near the facts of this case.Â Chief Justice Roberts said he’s looking for some type of limitation on what the federal government can do to force the states to participate in programs like Medicaid.

The coercion question: A large portion of Mr. Clement‘s argument in the first 40 minutes of the afternoon session was this: If a state doesn’t want to participate in the lawâ€™s Medicaid expansion, the federal government has the option to pull all of that stateâ€™s Medicaid funding, even for its earlier participation in the program.Â Mr. Clement says that’s coercive.Â During Mr. Verrilli‘s presentation, the chief justice and others are looking for some assurance that the federal government would not in fact pull all of a stateâ€™s Medicaid funding.

Mr. Verrilli stops short of providing any blanket assurances, though he notes that the federal government and the states usually are able to work out their differences on Medicaid. Photo: Melissa Golden for The Wall Street Journal

Chief Justice Roberts says, then, that the Supreme Court has to analyze this legal question as if the federal government really might choose to pull all of a stateâ€™s Medicaid funding if it doesnâ€™t participate in the expansion.Â He suggests the states would have virtually no choice but to give in to the federal governmentâ€™s demands.

Chief Justice Roberts, who could prove to be the crucial vote for the federal government on this issue, returns to a potentially key point he articulated earlierâ€”one that cuts against the state challengers.Â Despite the potentially coercive nature of the federal governmentâ€™s Medicaid expansion, it may be that the states compromised their sovereignty decades ago when they all agreed to take the Medicaid money, he says.

Mr. Verrilli says the Medicaid expansion is a generous offer by the federal government because they feds pick up nearly all of the costs for it.Â Chief Justice Roberts responds, if itâ€™s such a good deal, then why does the federal government need to make threats against states that donâ€™t take it?

Justice Sotomayor notes that some states chose not to accept funds from the federal government stimulus package during the economic downturn.Â Chief Justice Roberts responds that, in that instance, there were no additional adverse consequences for the states by rejecting those funds.Â This case, he suggests, is different. Photo: Getty Images

Before Mr. Verrilli sits down for the final time in these cases, he stresses the overarching goals of the health-care law and urges the justices to keep those in mind during their deliberations.Â By providing health care to millions more Americans, the law leaves citizens â€œunshackledâ€

But wait, there’s more:Â Chief Justice Roberts gives Mr. Clement five minutes to make a rebuttal, and he also returns to the challengers big-picture themes.Â Itâ€™s a “funny conception of liberty,” he says, to force someone to buy an insurance policy whether they want it or not.

Chief Justice Roberts thanks all the lawyers who participated over the three days of oral arguments.Â And with a bang of his gavel, the case is submitted.Â Now the waiting game for both sides begins.Â If thereâ€™s one thing thatâ€™s clear over the three days, itâ€™s that the court appears closely divided on nearly every issue.Â The only true consensus came on Day 1, where the court seemed to clearly believe that there were no jurisdiction hurdles that would prevent it from passing judgment on the health-care law now.

Meanwhile, across town,Â the White House said it remains confident the Supreme Court’s decision will be in its favor on the health-care law, despite predictions from some that the Supreme Court will rule against the Obama administration.

In the afternoon session Wednesday, the justices were unexpectedly receptive to the challengers’ argument that the lawâ€™s expansion of the federal-state Medicaid program for the poor unconstitutionally coerces states to spend more on the program.

And with more than six hours of argument complete, it was clear that the justices gave the government a hard time on multiple fronts, leaving the fate ofÂ President Barack Obamaâ€™s legislation unclear. That leaves tense waiting ahead for the administration and the health-care industry, with the Supreme Courtâ€™s decision expected by the end of June.

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Washington Wire is one of the oldest standing features in American journalism. Since the Wire launched on Sept. 20, 1940, the Journal has offered readers an informal look at the capital. Now online, the Wire provides a succession of glimpses at what’s happening behind hot stories and warnings of what to watch for in the days ahead. The Wire is led by Reid J. Epstein, with contributions from the rest of the bureau. Washington Wire now also includes Think Tank, our home for outside analysis from policy and political thinkers.